Student loans in Oklahoma bankruptcy are one of the most frustrating aspects of modern life. In order to obtain the education you need for the career you want, you have to take on debt. Sadly, that doesn’t always work out. Employment fluctuates, life intervenes, and student loans go from being an annoyance to a full blown crisis. As bankruptcy attorneys, we see this all the time. Unfortunately, our ability to deal with student loans directly is greatly limited, unless you are fully disabled. But just because we cannot directly go after the loans doesn’t mean bankruptcy can’t help.
How Bankruptcy Can Help with Student Loans
While most debts can wipe away, or “discharge,” in bankruptcy, federal law sets aside certain types of debts that cannot discharge. These include things you would expect, like certain past due taxes or fines from a court, but also include past due child support and, of course, student loans in Oklahoma bankruptcy. As of 2005, this rule not only applies to loans given out by the federal government, but any student loan issued by the government, a private entity, or even a non-profit that receives government funding. The only real exception to this is for people who are totally disabled. Their circumstances are such that the courts consider repayment of student loans a hardship.
Benefits to Bankruptcy to Student Loan Debt
Bankruptcy can still help student loan debt. There are several benefits in regard to student loans in Oklahoma bankruptcy. First, by filing a Chapter 7 bankruptcy, you eliminate all of your other debt. Money you spend on credit card bills or hospital bills can now go toward student loans. Reducing the number of things you have to pay can simplify your financial life. Second, filing bankruptcy offers a reprieve from paying student loans during the bankruptcy process. Even though student loans cannot discharge, they must obey the orders of the court like any other creditor.
One of the first things the court does in bankruptcy is order a “stay”, which means that no creditors, student loans included, may take collection activities against the debtor without the court’s permission. In a Chapter 7, this means 90 days where you do not have to make your payments. You can use that time to save money to pay down a delinquency when the case ends or to save some extra money for emergencies.
Chapter 13 Filing and Student Loan Debt
In a Chapter 13, a number of different things can occur with student loans in Oklahoma bankruptcy. If the loans are small enough, they may be paid off in their entirety by the Chapter 13 plan. If they are too large to pay off, they can categorize as “long term debt”. This means that the trustee will make the normal monthly loan payment out of the plan. Thus, you have one less thing to worry about during the life of your plan. If you have a delinquency, that can be addressed by a Chapter 13 plan as well, allowing you to get current on your loans by the time you finish your case. This can help to avoid costly defaults or potentially lawsuits from student loan servicers.
More bankruptcy information – Debts forgiven in bankruptcy
Student Loans in Oklahoma Bankruptcy Help
Just because student loans cannot discharge doesn’t mean bankruptcy cannot help. If you have significant student loan debt in addition to other debts, contact us today to see what your options are for relief. Get the fresh start you deserve while protecting most if not all of your assets. Call for Tulsa bankruptcy help at 918.743.2233